Hilton snatches Small Luxury Hotels of the World alliance away from Hyatt

Hyatt took another blow on the partnership front this week, as Hilton is now poised to be the new exclusive partner with Small Luxury Hotels of the World, a platform of 560 independent luxury hotels around the world.

The partnership is a major boost to Hilton's luxury network, which currently relies on brands like Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts and LXR Hotels & Resorts, which is a soft brand of independent-style hotels that tap into the Hilton booking and loyalty systems.

SLH has been a Hyatt partner since 2018 and was a major boost for Hyatt in Europe, where it had a smaller footprint — especially prior to the Apple Leisure Group takeover. This is the second blow to Hyatt on the partnership front in less than a year, as MGM Hotels & Resorts ditched the hotel company last year in favor of a partnership with Marriott slated to begin early this year.

"We're thrilled to begin this win-win relationship with Hilton as it brings exciting possibilities for both brands," Shaun Leleu, chairman of Small Luxury Hotels of the World, said in a statement. "Hilton customers, including Hilton Honors members, gain access to our unrivalled collection of exceptional boutique hotels, while our properties enjoy amplified reach to a loyal and discerning audience. It's a game changer for independently owned hotels on a global scale."

The SLH-Hilton partnership, which will fully roll out in the coming months, means all Hilton Honors members will be able to book a stay at a participating SLH property and earn and redeem Hilton Honors points. Participating SLH properties will appear on Hilton's booking channels, meaning even non-Hilton Honors members who book direct can still opt for a stay at an SLH-partnered hotel.

Given the release's use of "participating," it appears not every SLH property will take part in the Hilton partnership (similar to how it worked with Hyatt). But Hilton CEO Christopher Nassetta emphasized on a company earnings call Wednesday that he felt a majority of SLH properties would opt into the Hilton partnership.

Going after SLH enables Hilton to tap into niche markets that would be hard to find a way to shoehorn one of Hilton's existing brands into. Nassetta noted SLH doesn't overlap with any of the larger types of hotels that would be affiliated with one of Hilton's existing luxury brands.

"This relationship with Small Luxury Hotels of the World will grant Hilton customers and Hilton Honors members access to a community of high-end boutique hotels in exciting new luxury travel destinations, giving them more ways to dream, book, and earn and redeem points with Hilton," Chris Silcock, Hilton's president of global brands and commercial services, said in a statement.

The geographic breakdown of SLH is roughly 60% in Europe, 20% in the U.S. and 20% in the Asia Pacific region, Nassetta said.

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Following the initial publication of this story, a Hyatt spokesperson noted the company, in the coming months, plans to leverage the Mr & Mrs Smith booking platform of small luxury hotels, which it acquired last year, to provide World of Hyatt members options in this space. It's expected these properties will appear on Hyatt reservations and booking channels.

"As our business continues to evolve and we strive to offer our guests and members new ways to explore the world, we have mutually made the decision to end our relationship with SLH in the near future," the Hyatt spokesperson said of the SLH partnership ending. "At this time, World of Hyatt members can still book participating SLH Hotels on Hyatt's booking channels, and nothing changes as of now for existing World of Hyatt member reservations. More information on the end of this relationship will be shared with guests and members in the coming months."

Hilton's luxury push

The SLH partnership announcement arrived the same day Hilton reported a $1.15 billion profit for all of 2023, including $150 million for the last three months of the year. Eyes are still on what's happening at the company and its push further into the luxury and lifestyle space.

Reports emerged this week Hilton is considering an acquisition of Graduate Hotels, a smaller chain of lifestyle hotels in college towns or cities with a significant higher education presence. But the company is also reportedly considering an acquisition of NoMad Hotels, a two-property brand that could unlock the door for Hilton's ambition to operate in the luxury lifestyle hotel sector.

While Nassetta noted, as company spokespeople have said in the past, that he wouldn't comment on rumors or speculation, he did indicate Hilton is open more to brand takeovers today compared to its longtime mantra of "build don't buy" when it comes to brands. While competitors like Marriott, Hyatt and IHG have all made acquisitions in recent years to fill in holes in their portfolios or geographic networks, Hilton typically grows its own brands.

Given the financing climate of today, Nassetta said there is more stress in the system than normal. Hilton still maintains a "tough filtration system" in terms of deciding whether to acquire something, but the current climate also "presents more opportunity to do things like [an acquisition]," he added.

While he wasn't announcing any takeover deals today, Nassetta appeared to agree with broader industry sentiment that the future mergers and acquisitions cycle in the hotel orbit and at Hilton would be "tuck-in acquisitions" compared to any kind of mega-takeover like Marriott's $13 billion takeover of Starwood in 2016.

Further, don't think of the SLH partnership as a signal Hilton is done with its growth in the luxury or luxury lifestyle space. Hilton is still working on an additional brand play in order to better compete in the luxury lifestyle sector currently dominated by players like Marriott's Edition and Hyatt's Alila.

"We are still hard at work," Nassetta said of Hilton's luxury lifestyle brand ambition. "You should expect sometime this year — hopefully, sooner than later — to see us enter that space."

Related reading:

• The award traveler's guide to Hilton Honors
• How to choose the best Hilton credit card for you
• What is Hilton Honors elite status worth?
• The best credit cards to reach elite status
• Which credit cards offer the most lucrative rewards for hotel stays?
• The best hotel rewards programs in the world
• Best hotel credit cards